Xzin, on the money

[Caspian]

http://money.cnn.com/2008/09/25/news/companies/JPM_WaMu/index.htm?postversion=2008092519


Quite possibly the biggest losers in Thursday's deal are WaMu's stock and debt holders, who were effectively wiped out. Referring to:
US Banking System + Washington Mutual (WaMu) ('http://www.dual-boxing.com/forums/index.php?page=Thread&postID=121457&highlight=wamu#post121457')

At least no depositors got hurt.

[Sarduci]

Deposits are backed by the government and separate from stock. They were never at risk unless you went over the FDIC insurance limit.

[Caspian]

Deposits are backed by the government and separate from stock. They were never at risk unless you went over the FDIC insurance limit.Correct, but the article stated that even uninsured deposits are safe with this transaction - which is good news for those people and my point.

[Stabface]

Deposits are backed by the government and separate from stock. They were never at risk unless you went over the FDIC insurance limit.

Yeah - keep thinking that... FDIC's insurance fund = $45B, while WaMu's deposits taken over by JPMorgan = $134.7B. While some of these deposits are undoubtedly over the $100K/$250K limit, it's almost certain that the total is over the $45B the FDIC has on hand.

[Xzin]

Because JPM took over WaMu and agreed to back their deposits, no depositor money appears to be at risk - even accounts over 100k. But that just means you got lucky. It could have gone either way. FDIC would have likely been wiped out (which may be why JPM swooped in) and they would have gone to the Treasury for more. Billions of deposits have been pulled out of WaMu over the past week or so - and rightfully so. At what point can JPM no longer take over banks? They took over Bear not too long ago. JPM has capital but it can't take over every bank. Who else is out there? Citi? BoA? GS? None of the big boys stand out as exceptionally strong right now - all of them were leveraged to the hilt.

National City and Wachovia are among the next on my list of institutions to fail. They might not be next but they are not in good shape. Wachovia does not have as many death spiral type of deals like WaMu had and they have some juicy assets but we will see what shakes out.

We are on the verge of very interesting developments that have been building for many years. I can't profess to know how it will shake out but it could be really bad for many people. I really hope that it doesn't come to that though but I just don't see how we are going to turn the corner and 6 months from now have a roaring economy again.

[Crayonbox]

cleaned out my account with wamu last week. Thought they had at least another week in them before they were going to throw in the towel.

Like xzin said, everything was insured and backed by jpmorgan, but it could have gone the other way. Mass bank runs spells out disaster, but if you have a lot of money in one establishment, I would suggest spreading them out with banks that have a firmer base... which doesn't leave consumers with much of a choice at the moment.

[Xzin]

It doesn't hurt to look at T-bills or muni bonds through a SIPC backed broker, who carries extra insurance. Although don't expect much yield. Depending on the broker, you might even be paying them to keep your money. But there are some other vehicles out there that have some extra insurance built in.

[Xzin]

That big sucking sound you are hearing is the sound of Wachovia being sucked into Citi.

"The government says Citigroup will acquire the banking operations of Wachovia in a deal facilitated by the Federal Deposit Insurance Corp. The FDIC says Wachovia didn't fail, and that all depositors are protected and there will be no cost to the Deposit Insurance Fund."

"Wachovia shares plunged 91 percent in Monday premarket trading to 91 cents. The stock had closed Friday at $10, down 74 percent for the year."

"Citigroup will absorb up to $42 billion of losses in the deal, with the FDIC covering any remaining losses, the government agency said Monday. Citigroup also will grant the FDIC $12 billion in preferred stock and warrants."

So how exactly again is there no cost to the FDIC?

Wachovia just failed. It just was helped along so it didn't outright fail.

[Jaws5]

Credit is very tight now

as cridit continues to tighten, more banks and companies will fail.

this bail out is only a stop gap.

If bail does not happen , bad times are comming fast

:(

[Skuggomann]

Just wanted to shere this:

Today the goverment (or whatever) had to take over one of the icelanic bankcs called Glitnir.

[Xzin]

Shot down but not totally done. The week isn't over yet. Nice drop in the markets.

[Stabface]

Betting the DOW dips below 10K on Tuesday, unless some overnight magic happens... keep an eye on the Asia/Europe markets, they are going to be taking hits on tonight (Tuesday) too.

[Stabface]

Well, I've been wrong before :)

[Xzin]

You can't predict the markets with any degree of absolute certainty. The only thing absolute right now is volatility. Could we see more big drops? Sure. Is this a suckers rally? A false bottom before a real one? Hard to say. I still feel the market has lower to go but what I feel and what the market feels are rarely the same thing. Nobody can perfectly time the markets anyway. Look at the macro level issues and make your own determination of fair value and understand that the market can be "wrong" for a lot longer than you think (or remain solvent).

[Katharsis]

Have you seen the new dollar?

http://feathermoon.us/images/offtopic/dollar.jpg